Image: Bank of America on Google Android phone
Bank of America
Bank of America has more than 3 million customers in the United States using its mobile banking programs, available on a variety of devices including the Google phone, iPhone and BlackBerrys.
updated 10/5/2009 9:00:06 AM ET 2009-10-05T13:00:06

Banking by cell phone is growing in popularity, and the recession may be the reason behind it, experts say, as people "micromanage" their money more than ever before.

"The economic conditions and the way that we all pay a lot more attention to our money has caused a bit of an uptake in this service," says Charles Landry, VeriSign's general manager for products and innovation for the company's messaging and mobile media division.

"A lot of people certainly micromanage their money much more closely now than they did 24 months ago."

Avivah Litan, banking security expert for Gartner Research, said "almost every bank has a little R&D project going on with mobile banking. They're all experimenting with it." Some of those projects, she said, were "scaled back after the credit crisis hit, but now they're trying to pick them back up."

As those in the wireless industry meet this week in San Diego to talk about trends, mobile banking and finance will be among them. Apple's App Store, which has more than 85,000 programs available for its popular iPhone, lists several bank "apps" among its most popular finance programs, including those from Bank of America, Chase, Wells Fargo and Citibank.

"The cool thing about mobile banking that kind of trumps online (banking) is that it’s tetherless," said Mark Beccue, ABI Research senior analyst. "You don't have to be in front a computer to check your balance. And with the year we’ve had, people are really kind of eyeballing their personal finances more closely. Mobile banking takes it to the next step."

Image: Citibank app on iPhone
Citibank launched its iPhone mobile banking application last spring.
TowerGroup, a financial research company, projects that mobile banking users will quintuple in the next four years, going from 10 million active users this year to more than 53 million in 2013. It, too, cites consumers' ability to know their account balances anywhere and anytime as a key factor.

"As economic concerns prompt consumers to manage their finances more closely, their desire for real-time access to and control of their aggregated financial information is increasing the urgency for banks to create a mobile banking channel," TowerGroup said in a report.

A recent American Bankers Association survey found that for the first time, U.S. bank customers said they would rather visit their bank's Web site than the bank itself, with almost 25 percent of those surveyed preferring online banking.

Mobile banking did not have such an impressive number in the association's survey of 1,000 people; it was "preferred by 1 percent of consumers, primarily among 18- to 34-year-olds," according to the bankers' association, and barely registered a blip on the radar of those 35 and older.

Still, banks are "going to have to develop these (mobile) applications to keep 'digital natives' — young adults, 18- to 25-year-olds who grew up with computers and do everything from their phones — as customers," said Litan.

Most mobile banking programs perform some of the basics — letting you check your balance, deposits, withdrawals and transfer money to pay regular monthly bills, as well as providing a list of ATMs and bank branch addresses.

Smartphones — those with generally bigger display screens, Web access and e-mail — make mobile banking more appealing, but are not necessary in order to perform rudimentary banking tasks. In fact, most mobile banking is not done using such devices right now, said Beccue.

However, between 35 and 40 percent of U.S. wireless subscribers now have phones that have mobile Internet access, he said.

And text messaging — which does not require a Web browser — "is almost ubiquitous," he said. "Nearly every person with a cell phone can receive a text message."

ABI Research recently issued a "report card" for more than two dozen U.S. banks that do mobile banking, giving high marks to those that are "consumer-friendly" and easy to use.

Among the top-ranked banks: BB&T, Eastern Bank, Northeast Bank, USAA and Wells Fargo. Also scoring well were Bank of America, Chase, Capital One and US Bank.

Accessibility and "discoverability" — meaning how easy it was to find information about mobile banking on a bank's Web site — totaled 70 percent of the score.

"A big plus was if mobile banking was prominent on the home page, so you could easily find it and see some sort of link," said Beccue. "And once you got there, how descriptive was the information about mobile banking, and how easy was it for the consumer to understand what they needed to do and to activate it?"

The other 30 percent of the score was based on security and the range of services offered through mobile banking.

Different operating systems
Security is understandably a concern, but Litan of Gartner said that mobile banking "is more secure right now than Web banking, mainly because phones are pretty closed systems" compared to the operating systems of computers.

"A lot of phones don't enable 'plug-ins' to their Web browsers, or background processes to go on," so at this point, there's not much in the way of hacking, worms or viruses that can be executed on cell phones, she said.

In fact, because there are more than a half-dozen phone operating systems out there — from Symbian to Research In Motion's BlackBerrys — that makes it more troublesome and less appealing for criminals to try to crack the systems than those of computers, Litan said.

Of course, "it’s just a matter of time; the criminals will definitely figure out how to break the phones," she said.

"There are many kinds of what are now well baked-in guidelines to use to ensure that your transaction is safe and secure," said Landry of VeriSign, which provides digital security certificates for Web servers and also delivers text messages for hundreds of wireless carriers around the world.

Staying safe
PIN codes are required with mobile banking programs, and VeriSign also makes available "second factor authentication" to increase security.

"Say you ask to transfer money from checking to savings using your phone," Landry said. "You put in the amount, it then asks you for a separate PIN to put in, to verify that it’s you, and that you want that action done.

"In the event you lose your phone, first of all, there’s going to be log in and password information that will protect the consumer typically," he said. "And then, if someone did crack that and entered into the session, there’s going to be multiple levels of security and second factor authentication that’s going to come into play to prevent something nefarious, for lack of a better word, from happening."

Rob Sabella, vice president of product management at mFoundry, said "most mobile banking solutions can be disabled remotely by contacting the bank's call center or going online via your PC and disabling it yourself.

"If someone found your phone, they would need to know your password or PIN to use the service. If you already disabled the service with the bank, there is no way to use mobile banking, even with a valid password or PIN."

mFoundry's mobile finance technology is used in several iPhone banking apps, and is also employed in Starbucks' new iPhone app, which lets customers use their iPhones as a Starbucks card.

"Many banks offer their customers online security guarantees when using online banking," he said. "Those same guarantees should apply to mobile banking, since the service is as safe and secure."

Responding to text messages
Sabella recommends consumers be cautious when it comes to text messages, which are "useful for banking alerts, like your account balance is low, or for quickly requesting your balance, and getting a response text message."

However, he said, "your bank should never ask you for your password, PIN, account numbers or other sensitive information via text messages. Be careful when clicking on URL links in text messages.

"If you did not ask your bank to send you a text message to start using mobile banking, be suspicious of (Web) links in text messages, just as you would be in e-mails. Clicking on a link could send you to a 'phishing' mobile Web site asking for sensitive information. This is no different than using e-mail and clicking on links from your PC."

If you do have a Web browser on your phone, bookmark your bank's Web site, he suggests, as a way of being "more confident that you are going to their real Web site, vs. a phishing site."

Smartphone owners who can download applications to their devices should consider using them if they're available for their bank.

"The advantage is usually faster performance over mobile Web sites, and downloadable applications are more difficult for a fraudster to impersonate than mobile Web sites," Sabella said.

"Once you download and set up the application on your phone, you will usually see your bank's icon on your phone's main menu. The icon provides a fast, easy way to launch mobile banking."

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